Open Cuban market would have tremendous benefit for U.S. rice

If the U.S. trade embargo on Cuba were lifted, the USA Rice Federation and the Cuban government believe that overnight, Cuba would become the second largest market for U.S. rice, with half of what they import coming from the United States.

“Cuba would increase imports from the United States from 60,000 tons annually to about 350,000 tons,” Marvin Lehrer, USA Rice senior advisor for Cuba, speaking at the USA Rice Outlook Conference. “We do believe that over time, because of the logistics and historical preferences, we will become the dominant supplier of long-grain rice to Cuba. We estimate that at current values, this means about $275 million in annual sales to Cuba.”

Lehrer estimated that if lost rice sales to Cuba were regained, this would generate revenue for the United States at a 7 to 1 ratio, “when jobs, cost of transport, etc., are added to the balance sheet. So the economy is losing about $2 billion by not having full access to the Cuban market. That's a lot of money and lot of jobs.

“Open and fair trade is what we're looking for. It's good business for the U.S. rice industry and it's good business for the United States.”

Rice is the most popular food product for Cubans who consume almost a million tons annually. About 70 percent of its rice is imported. Cuba has the highest per capita consumption of rice in the Americas.

Lehrer says the United States is a natural supplier of rice “because we can deliver rice at many ports around the island, something large vessels cannot do.

“The problem in getting rice there is our outdated embargo on Cuba in place since 1961, which stopped trade from then until late 2001. The embargo prevents U.S. tourists from visiting Cuba, the sales of products to Cuba, the buying of products from Cuba and direct banking relationships.”

In late 2000, congressional action allowed for the sale of U.S. agricultural products and medicines into Cuba, but under restrictive circumstances. Rice sales were made in 2001 and deliveries started in 2002. Sales reached 175,000 tons in 2004. Since then, sales have tapered off primarily because of further restrictions that went into effect in 2005.

Since 2001, Cuba has purchased 777,000 tons of U.S. rice over a five-year period with a value of $160 million. “So in five years, we've sold them about one year's supply of rice. It could have been much more, but the harsh restrictions and the uncertainties about the next regulatory shoe to fall limited sales significantly.

The U.S. rice industry isn't looking at the embargo as a reason to slow down its efforts to build trade in the region, according to Lehrer. For example, the USA Rice Federation put on a Cuban trade show in the country in the fall of 2001, after which sales followed.

“We have participated in trade meetings and trade shows over the last seven years, trade meetings, member delegations, congressional visits, rice seminars, contests with chefs, rice events in public schools and other activities in Washington and in rice states to help open the door for rice sales in this market.

“My sense right now is that Cuba has enough rice for the short term. Their focus on purchasing from the United States will primarily be on products they can't easily source or get credit for elsewhere, things like eggs, dry beans, poultry parts.”

Lehrer doesn't see Cuba's lack of buying “as punishment for lack of action on the Hill, but it's simply a matter of price and lack of confidence of where U.S. policy is going. Cubans are very disappointed by the lack of congressional action to open trade.”

Meanwhile, great political change is on the horizon in Cuba, as the country deals with Fidel Castro's failing health. “In many ways, Cuba is already in the post-Fidel era. In 2006, Fidel turned power over to his younger brother, Raul, the head of the military since the Revolution.

“Raul has made some changes in the government, and is the architect behind many economic reforms. He opened tourism and is very organized.”

Lehrer said there is mounting apprehension about food security in Cuba, which is 100 percent dependent on beef, corn and the soybean complex and 80 percent dependent on rice. Their first priority is to feed their people. Raul is nearly 77 years old and knows he has a small window, and he has to make changes. What could follow him could be quite unpredictable.”

In 1958, when Cuba was the largest buyer of U.S. rice, the United States supplied between 80 percent and 90 percent of its needs. Currently, Mexico is the largest market for U.S. rice. But Cuba is one of the largest importers of rice in the entire world, at about 650,000 tons of milled rice annually.